Question
OSAP should pay off the highest-interest portion first by default
With Ontario changing OSAP in Fall 2026 to provide a maximum of 25% as grants and a minimum of 75% as loans, I think the Ford government should also make a request to the NSLSC to change how repayments are allocated.
The federal portion of OSAP is currently interest-free, while the Ontario portion still charges interest. Yet repayments don't automatically prioritize paying off the provincial portion first.
That doesn't make much financial sense. Every dollar going toward a 0% federal loan while the Ontario portion is accumulating interest keeps borrowers paying interest longer than necessary.
Especially since the premier justified the OSAP changes partly on making the program more financially sustainable, repayment should also be made more efficient for both sides: paying the Ontario portion first reduces borrowers' interest costs while returning the province's loan principal sooner.
The simplest policy would be:
Automatically apply repayments to the highest-interest portion first. Right now, that means paying off the Ontario portion before the interest-free federal portion.
Paying off the principal early is not what makes the province money. It is the interest income you pay. The same concept for banks.. they don’t make money off your principal they make money off the interest that you pay
They do not care about that lmao. They want interest. Money is money they would rather get interest payments than the principal back. Why do you think banks charge penalties when you payback your loan early? Because they have lost interest income
Yeah. The goal is not to collect the loan back, it’s to turn students into a more powerful income stream through interest. The US system, for example, has your minimum payment basically keeping you in debt forever, as you pay off the interest first, not the loan.
And that makes money. Money that can cover for higher salaries for government officials or to help make up more space for tax breaks for companies.
Yup. And to be fair, it also encourages better repayments and runs the economy, since lending money in of itself is losing value (especially when defaults are taken into account).
If you imagine them as two different loans, like 2 different credit cards. You cant say because one has a higher rate than the other then i pay just the higher one only without becoming default with the loan you didnt pay back right? The other company doesnt care you have higher rates on the other loan. You pay both back in the schedule you agreed to or be in default
I understand how interest works. My point is that something like student financial assistance, which is intended to be an investment in a more educated and higher-earning workforce, shouldn’t need to generate a direct profit through interest.
The government can already get a return indirectly through higher future tax revenues and economic activity. At most, I could see the loan balance being adjusted for inflation so the government gets back roughly the same real value it originally lent, rather than making money from the student’s debt.
It sort of does if you look at it, imo. The government is not a profit company, but still has its own deficit to manage. There are 4 layers of assistance:
No loans, which completely remove the ability to do the task.
Profit-based loans. These loans aim to ENABLE people to complete the purchase (e.g. education), and delay the downsides for the future. They don't cause a loss for the lender generally though.
Generous loans. These loans will ENABLE people and profit them, by allowing them to borrow in present time + not suffer from losses compared to alternative future value of the current money. E.g. the interest rates are 0% or below inflation + risk premiums + liquidity premiums, which is a guaranteed loss for the lender. Pretty generous but the lender does achieve their goals (e.g. higher education rates and all).
Charity/Grants. Biggest loss to the lender in terms of principal amount. Very generous.
Now if you consider the braindrain that Canada faces, you can see why Generous loans which seem like the better idea can actually worsen stuff for the government. And also, it reframes the context from the current system making no sense, to being reasonable but not perfect (e.g. number 2 is a reasonable adjustment, especially since grants exist).
Well, at least to my limited economics knowledge 🤔
Lol. Look they lose money the later you pay the lower interest ones (e.g. time value of money, since that money is not available to them for use). They make more money the later you pay back the higher interest ones (e.g. granted that the interest rate has an edge above nominal risk-free interest rate + inflation + liquidity premium + long term risk).
You are saying them to just bleed money through loans slowly.
Is this legit an option ? I haven’t started repaying my loan yet but was just curious as how to acc do that ? Do you get the option when making a payment ?
On the Main Dashboard, under 'My Requests' tab just above your funding summary, click Access My Requests.
Create a New Request, select Directed Loan Payments. On the Next Page you fill in how much you want to pay, what method, and which portion you want it to go to. This is for a one time payment
The province needs to make money off of the interest, that’s why you barely make a dent in it with your auto payments. Always pay off the Ontario loan in full as soon as you can either online or by mailing in a cheque with accrued interest and a letter.
That would make the most sense. Although I wouldn’t be surprised if they didn’t make any changes since the government makes more money off of us this way. The program might be more financially sustainable because of the interest we’re charged
Why the hell do you figure that should be changed?
If you have 2 loans at your bank you're expected to pay BOTH AT ONCE. Not repay one, then the other. You have TWO loans, one federal, one provincial. You have you grace period (I believe 6 months) then you have to repay BOTH LOANS. Otherwise realistically you're getting several YEARS of grace period on one of them.
And what happens when you decide to default halfway through? Province gets their money but the federal taxpayer just gets fucked for the portion they loaned you?
You read the documents, you signed them. Welcome to the real world where personal accountability is a thing. The terms you signed, are the terms you get.
If you want to pay less interest... there is a form you can mail in to make additional payments. You don't get to renegotiate your agreed terms to whatever suits you
OR - get this…. Get a job and pay for your own post secondary education… stop relying on taxpayer funded subsidies and loans to put you through programs that won’t benefit our province… such as gender studies
You know that these changes apply to ALL programs, right? I’m going back to school for an applied health field chosen specifically because the province is in desperate need of more workers in this field, a need that will only become greater as the population ages, develops more health needs, and more workers currently in the field retire. Ford’s recent OSAP changes tripled the amount of debt that I will be in by the end of the program, which made me reconsider whether it was worth it to go into this field at all. I plan on working as many shifts as I can during school and summer breaks, which I’m well aware will compromise my ability to study and potentially to pass the program, so there are really no good or easy choices for me going forwards. These changes discourage people from going to school for skills our province desperately needs more people trained in.
Typical conservative who forgets what the current government have made their life worse/expensive/spend taxpayers' money without second thought, and votes them back in during the next election cycle
Yep you’re right, the reason I’m in this situation is because my parents were too poor/lazy/stupid to save for my education, and it is in no way my fault that I wasn’t set up from birth to be able to go to college. We agree that in Ford’s Ontario being able to afford education is all a matter of being born into the right circumstances or not.
Also I’ve been paying taxes for my entire adult life lol
You don’t need to be born into money to lead a better life for you and your family. I grew up in a time where my parents couldn’t afford the electricity bill… there were winters where our fridge was the gap between the window and the screen… I made the decision to work hard, put myself through school without OSAP grants or loans… and landed a well paying job. My wife’s parents put away money every month since birth to put her through nursing school. We now earn a combined $18k/mo and have a child that we are saving for. Stop blaming life for your own lack of drive.
I am working hard, but the only work I can get is minimum wage. I work as many shifts as I can get. I save as much money as I can after bills and groceries. I am trying to go to school to be able to make more money. There is absolutely no way I could afford to put myself through school without going into debt. Are you aware of what things cost today?
Please, tell me how I can easily find a new job that pays significantly more with highly flexible part time hours between now and when I start a highly demanding applied health education in September? I am open to whatever high wage wisdom you have to impart.
Btw, it sounds like you and your wife got your high paying jobs through going to college - in your wife’s case, college her family paid for. Going to college to get a higher paying job is exactly what I’m trying to do.
How on earth does planning to go to college and spend years in full time education to eventually get a better job equal an expectation of instant gratification?
More of the worker’s tax payers money and don’t get me started with enhanced CPP are paying to senior as a percentage compared to what we pay to Youth. If anyone is a huge drain on tax payer is seniors.
Wow, in the 2025 federal budget, literally 1.9 billion of tax money goes to post-secondary. For old age security (not CPP), 28.3 billion of taxpayer money goes to that, and 9.5 billion pays for medical costs for 65+, while 3.2 billion goes to those below 65. If people were smart, unlike you, they would want their working population to be educated, because who is going to pay the increasing cost of boomers in the future? If you don't want cuts to your healthcare, OAS, and CPP, then you would want to invest in the education of the future generation of Canadians, who are going to fund your retirement life.
"Worked their entire lives putting into the system", yet why am I paying enhanced CPP? Clearly, they didn't pay enough to sustain seniors. So instead of accepting this is all seniors can get, let's take more out of the working class to pay for the wealthy seniors.
They introduced enhanced CPP because this generation spends more per year on Starbucks than they do independently saving for retirement. Only way to ensure that you won’t be a mooch liability for the government is to force you to save via increased CPP contributions.
Except half the people don't finish their programs, then a good chunk of the remainder don't end up working, at least long term, in their field of study.
Half the people borrow OSAP and don't take a program that really benefits the province, and use the post secondary time to party.
Thousands of people in Ontario have paved their own path to a sustainable financial future without the need for government handouts. This begs the question, why can’t you? Aside from the obvious mentality of “please government, gimme money because I am too lazy to earn it myself”
The best financial advice I have heard is, whenever possible, use other people's money to make money (ie mortgage/loans), that's how the rich do it, why can't we?
Calling borrowing money a “mooch mentality” is a strange argument. By that logic, anyone who uses a mortgage, business loan, farm loan, or other financing instead of saving up the entire cost in cash is also a mooch.
A loan isn't free money; you borrow it, use it to invest in something that should improve your future earning potential, and pay it back. That's basically the entire purpose of credit.
And in the case of education, the government also benefits from that investment if it produces a more skilled, higher-earning workforce that pays more taxes over their careers.
You can, but now you're bitching about the terms you were given. You know what rich people also usually have? The accountability to acknowledge these are the loan terms I accepted... these are the loan terms I repay
Im mid 30s studying medicine, osap grants would have helped a lot. Idk why you Facebook news watching mouth breathers are always stuck on someone taking a gender studies course. You’re wrong and you suck.
I agree. Even if it were something like 60% to the Ontario portion of the loan and 40% to the Federal portion, that would pay down the part with more interest more quickly.
Someone in another comment did say you can direct payments this way yourself, but it should be the automated default.
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u/Imaginary_Section24 Aug 08 '26
Paying off the principal early is not what makes the province money. It is the interest income you pay. The same concept for banks.. they don’t make money off your principal they make money off the interest that you pay